The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Drive Shack Inc. (NYSE:DS)?
Is Drive Shack Inc. (NYSE:DS) a buy here? Money managers are in a pessimistic mood. The number of long hedge fund bets shrunk by 1 in recent months. Our calculations also showed that DS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). DS was in 3 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with DS positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are plenty of gauges shareholders can use to assess their stock investments. A duo of the less known gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a very impressive margin (see the details here).
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the fresh hedge fund action regarding Drive Shack Inc. (NYSE:DS).
How are hedge funds trading Drive Shack Inc. (NYSE:DS)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in DS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Drive Shack Inc. (NYSE:DS), which was worth $0.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $0.2 million worth of shares. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Drive Shack Inc. (NYSE:DS), around 0.0004% of its 13F portfolio. D E Shaw is also relatively very bullish on the stock, earmarking 0.0003 percent of its 13F equity portfolio to DS.
Because Drive Shack Inc. (NYSE:DS) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few hedge funds who sold off their entire stakes last quarter. Intriguingly, Philip Hempleman’s Ardsley Partners cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $2.2 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Drive Shack Inc. (NYSE:DS) but similarly valued. These stocks are Ceragon Networks Ltd. (NASDAQ:CRNT), Cassava Sciences, Inc. (NASDAQ:SAVA), Sutter Rock Capital Corp. (NASDAQ:SSSS), and Middlefield Banc Corp. (NASDAQ:MBCN). This group of stocks’ market caps match DS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRNT | 3 | 4412 | -1 |
| SAVA | 5 | 7572 | 0 |
| SSSS | 8 | 8303 | 0 |
| MBCN | 4 | 10830 | -1 |
| Average | 5 | 7779 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $1 million in DS’s case. Sutter Rock Capital Corp. (NASDAQ:SSSS) is the most popular stock in this table. On the other hand Ceragon Networks Ltd. (NASDAQ:CRNT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Drive Shack Inc. (NYSE:DS) is even less popular than CRNT. Hedge funds clearly dropped the ball on DS as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on DS as the stock returned 32.2% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
